Spring Statement: Noonan hopes up to €1.5bn budget leeway will put spring in voters’ steps

Yesterday’s Spring Economic Statement, while seen as a de facto general election launch for the Fine Gael-Labour coalition, also gives us an idea about how much cash is in the Government’s coffers.

Wed, 29 Apr, 2015 - 01:00

Juno McEnroe

The Finance Minister promised there would be “no more boom and bust” cycles while saying there would be “expansionary budgets” from now up until 2020. October’s budget will allow the Coalition space to spend between €1.2bn and €1.5bn. How it gets spent is the all-important question.

There are a number of competing interests at play:

Tax cuts

Finance Minister Michael Noonan reiterated yesterday that people should see improvements in their living standards in the coming years, with cuts to the Universal Social Charge and income taxes. This is the Coalition’s ‘golden ticket’ to buying votes for the next general election.

Pay rises

Private sector employers have already begun agreeing modest rises. It’s now the public sector’s turn, argue the trade unions. Siptu boss Jack O’Connor made this abundantly clear during a TV debate on Monday night. He said: “What we’re looking for is a fair distribution of the recovery.”

We can expect more of this when the pay restoration talks begin between unions and Government next month. Moreover, the Coalition are keen to make sure their fingerprints are all over any sanctioned pay rises so they can benefit at the polls. The opening of the pay talks were agreed at Cabinet yesterday.

Cutting the deficit and unemployment

With the public sick of austerity and years of Troika-led cuts taking out services and piling on stealth charges, the last thing the Coalition want to say is that the hard-won gains are going on paying off debt. But the statement predicts the deficit will fall to 2.3% this year – significantly below the original 3% target.

On employment, a key pitch by the two ministers in charge of the purse strings was the ambition to have two million people in employment by next year. Furthermore, the Coalition now has committed to replacing all jobs lost during the recession by 2018.

Repossessions and mortgage arrears

This long-standing issue is starting to worry the Coalition. For years, a ‘tsunami’ of repossessions by the banks has been forecast. We now know that hundreds of cases are being brought before the courts on a weekly basis. There are still 37,000 accounts in long-term arrears –of more than two years. In the meantime, a package to ease mortgage arrears is expected to be announced by the Coalition in the coming weeks, Mr Noonan said yesterday. The role of the insolvency service is to be enhanced, with additional solutions to be announced. Mr Noonan also reiterated plans to drag in the six main banks and apply pressure on them to reduce mortgage interest rates.

Yesterday’s much-trumpeted plan had few new or innovative announcements. Time and again, both Mr Noonan and Mr Howlin used the Dáil floor to attack opposition policies rather than go into detail about their own spending proposals, over the next five years. Instead, what we got was a ‘Reeling-in-the-Years’ feature-length staged piece about the Coalition’s action in recent years.